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Eat a chip, or have a pretzel, the tax is hardest to swallow

POLITICS is at least 50 percent symbolism. The Glendening administration enters the 1996 legislative session bearing a certified trademark not only of Maryland's whacky business policies but also of its own failures to substantially change those policies last session.

Gov. Parris N. Glendening called the 1995 General Assembly term "the most pro-business legislative session in two decades."

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Well, everything is relative.

A pro-business session in Maryland is one where they don't enact a five-year plan to nationalize the telephone companies.

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The 1995 session did cut some business taxes, trim real-estate closing costs and boost the Sunny Day Fund for keeping or luring companies.

But, despite solemn promises from the governor, Maryland's junk-food connoisseurs and their suppliers continue to be oppressed by the dreaded, dietarily correct snack tax.

Every time you buy a $1.99 bag of pork rinds, pretzels or potato chips, the government gets an extra dime.

The snack tax isn't intrinsically important. It raises about $15 million a year, about a thousandth of Maryland's $14 billion budget.

But last year the snack tax was enshrined, deservedly or not, as a totem of regulatory intransigence.

Pepsico Inc. is one of the few companies in recent years to bring jobs to Maryland that don't involve pouring Slurpees or scanning bar codes. Pepsico decided to build a factory here.

You'll remember, Marylanders, that a factory is a building filled with well-paid people and expensive equipment making things other people want to buy.

Pepsico's factory, in Harford County, makes pretzels and potato chips. Pretzels and potato chips are subject to Maryland's junk-food tariff.

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So are the corn chips and other salty snacks made by Pepsico's Frito-Lay unit.

As reported last year by The Sun's John Woodruff, Pepsico takes exception to this.

It has done so since the General Assembly, grasping to restock recession-shrunk revenues, passed the snack tax in 1992. That was the year Frito-Lay's Harford County plant was under construction.

Pepsico takes so much exception that it slammed the brakes on a plant expansion that was supposed to add more than 400 jobs.

Reasons to be upset

Critics have charged Pepsico with petulance and bullying.

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But the snack tax is highly focused, philosophically unjustified and fiscally trifling.

Other food isn't taxed in Maryland. The tax discriminates against lower-income consumers.

If you were Frito-Lay President Steven S. Reinemund, you'd complain, too.

Two governors have pledged to bury the snack tax. It remains.

A Senate committee killed a snack-tax repeal last year after legislators worried about cutting off revenue.

An embarrassed Governor Glendening promised to snuff the snack tax in the 1996 session, prompting Frito-Lay to go ahead with the factory expansion.

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"We are still holding firm to the commitment that we got from the governor of Maryland, the speaker of the House and the president of the Senate," said Robbi Dietrich, director of Frito-Lay's consumer and government affairs.

"They committed to leading the efforts to repeal the snack tax in the next legislative session."

They did. We'll see if they succeed.

The snack tax isn't in the governor's budget for next year.

But "any legislative session is unpredictable, having served there for eight years," acknowledges Harford County Executive Eileen M. Rehrmann.

A friend of the tax

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And some legislators aren't ready to forgo the potato-chip money.

"At a point in time when we're facing deep cuts on the federal level, when the state is projecting a deficit in the current fiscal year of $80 million and next fiscal year of $150 million, this is no time to be providing a tax break to please one industry," said Sen. Christopher J. Van Hollen Jr., a Montgomery County Democrat who helped kill the repeal last year.

"When your boat's already got a couple holes in it, it doesn't do any good to shoot another."

The ship of taxation sails on, the Jolly Dorito flying from its bridge.


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